An overview is given of the changes in institutional psychiatry in general psychiatric hospitals of the Netherlands. These hospitals, being for a long time on the forefront of mental health care, were faced with a dualistic position of both concentration and decentralisation of functions. Data on deinstitutionalisation of chronic patients can be interpreted in a hopeful and pessimistic way. The article describes the influence of the social psychiatrist Robert Giel in this debate and pleads for further development of psychosocial rehabilitation programmes.